Brask v. Bank of St. Louis, s. 36434

• Decision Date: 18 November 1975
• Docket Number: 36475,36457,Nos. 36434,s. 36434
• Citation: 533 S.W.2d 223
• Parties: William G. BRASK et al., Plaintiffs-Respondents, v. BANK OF ST. LOUIS et al., Defendants-Appellants. . Louis District, Division Three
• Court: Missouri Court of Appeals

Page 223

533 S.W.2d 223

William G. BRASK et al., Plaintiffs-Respondents, v. BANK OF ST. LOUIS et al., Defendants-Appellants.

Nos. 36434, 36457, 36475.

Missouri Court of Appeals, St. Louis District, Division Three.

Nov. 18, 1975.

Motion for Rehearing or Transfer Denied Jan. 23, 1976.

Application to Transfer Denied March 8, 1976.

Burton H. Shostak, St. Louis, for defendant-appellant Bank of St. louis.

Albert E. Schoenbeck, Steven M. Schoenbeck, St. Louis, for defendant-appellant Prudential Savings & Loan Assn.

Harry G. Neill, Jr., St. Louis, for defendant-appellant Polaski Savings & Loan Assn Julius H. Berg, St. Louis, for plaintiffs-respondents.

GUNN, Judge.

This appeal involves a declaratory judgment action seeking determination under § 448.080 of the Missouri Condominium Property Act ¹ of the priority of rights between condominium common expense liens and prior recorded deed of trust encumbrances. The trial court found that the common expense liens were superior to the deed of trust encumbrances. The deed of trust holders appeal, urging that the trial court's decision is contrary to the express statutory language of § 448.080(2) RSMo 1969. We find that the trial court's decision is contradictory to § 448.080 and reverse the judgment.

The facts have been stipulated. Plaintiffs-respondents are the duly elected board of managers of Hazelcrest I and II Condominium located in St. Louis County. Defendants-appellants Bank of St. Louis, Pulaski Savings & Loan Association and Prudential Savings and Loan Association are lending institutions and holders of deeds of trust on certain units in Hazelcrest I & II Condominium. The other defendants-appellants are unit owners of the condominium, having purchased their units after deed of trust foreclosure. The Hazelcrest Condominium declaration was recorded on October 21, 1964 in accordance with the Missouri Condominium Property Act. By virtue of the recorded declaration, each year plaintiffs have assessed an estimated cost amount to each unit owner to cover the common expense costs incurred by the condominium management for the benefit of all the unit owners. ² The assessment for the common expense costs is made in proportion to each owner's percentage of ownership in the common elements. ³ The Hazelcrest Condominium declaration contains a provision taken from the matrix of § 448.080(2) establishing a lien for common expenses on any unit of the property for which the common expense has not been paid. § 448.080(2), in pertinent part, provides:

'2. If any unit owner fails or refuses to make any payment of the common expenses when due, the amount thereof shall constitute a lien on the interest of such unit owner in the property, and upon the recording of notice thereof by the manager or board of managers shall be a lien upon such unit owner's interest in the property prior to all other liens and encumbrances, recorded or unrecorded; except only taxes, special assessments and special taxes theretofore or thereafter levied by any political subdivision or municipal corporation of this state and other state or federal taxes which by the law are a lien on the interest of such unit owner prior to pre-existing recorded encumbrances thereon, and encumbrances on the interest of such unit owner recorded prior to the date such notice is recorded which by law would be a lien thereon prior to subsequently recorded encumbrances, but only if such prior recorded encumbrance contains a statement of a mailing address in the State of Missouri where notice may be mailed to the encumbrancer thereunder. . . .'

The plaintiffs, as board of managers of Hazelcrest Condominium, have filed notice whenever a unit owner has failed to pay an assessment for common expenses when due in order to establish a lien for such expenses. But substantially all of the condominium units are subject to recorded deeds of trust to secure purchase money and other notes for borrowed money with each such deed of trust containing the § 448.080(2) requisite statement of a Missouri mailing address. The particular condominium units which are involved in this case are encumbered by deeds of trust held by the defendant lending institutions, and there have been foreclosures on the deeds of trust by defendant lending institutions upon default by previous unit owners. It has been by virtue of the deed of trust foreclosures that defendants Life Insurance Company of Virginia, Mary A. Williams, S. B. Spizman and Larry May Realty Co. have become owners of the particular condominium units here involved. Subsequent to the recording of the deeds of trust held by defendants, the plaintiffs recorded appropriate notice of assessment for common expenses due and owing on the particular units. Critical to the determination of this case is the fact that each deed of trust foreclosed by the defendant lending institutions had been recorded in compliance with § 448.080(2) and the Hazelcrest Condominium declaration prior to the recording by plaintiffs of the notice of assessments due and owing for common expenses on the units involved. ⁴ None of the assessments for common expenses due and owing at the time of the foreclosure sales has been paid. The issue which we must decide is which encumbrance has priority--1) the prior recorded deeds of trust; or 2) the later recorded lien for common expenses filed at the time the annual assessments became due and owing?

The trial court declared that the liens for common expenses held by plaintiffs were prior in right. The trial court made the following findings which served as a basis for its conclusion: 1) that the deeds of trust were subordinate to the common expense liens since the latter were covenants running with the land by which each grantee was bound pursuant to the condominium declaration; 2) that by reason of the recorded condominium declaration, the condominium units were subject to an inchoate lien for all common expense assessments, and when the assessments were made, the liens related back to the time of the recording of the declaration; 3) that the deed of trust foreclosure sales did not extinguish or otherwise affect the superior common expense liens held by plaintiffs; 4) that the defendant lending institutions acquired their deed of trust encumbrances with the knowledge that the common expense assessments ran with the land and that the common expense assessments were thereby superior in right to the deeds of trust; 5) that the mere fact that the deeds of trust contained statements of address where notice of subsequent encumbrances could be mailed did not affect plaintiffs' liens for common expenses. In reaching its conclusion the trial court was influenced by the following provision of the condominium declaration which was recorded prior to the recording of defendants' deeds of trust.

'Each grantee . . ., by the acceptance of a deed or conveyance, or each purchaser, accepts the same subject to all restrictions, conditions, covenants, reservations, options, liens and charges, and the jurisdiction, rights and powers created or reserved by this Declaration or to which this Declaration is subject, and all rights, benefits and privileges of every character hereby granted, created, reserved or declared, and all impositions and obligations hereby imposed shall be deemed and taken to be covenants running with the land, and shall bind any person having at any time any interest or estate in said land, and shall inure to the benefit of such unit owner in like manner as though the provisions of this Declaration were recited and stipulated at length in each and every deed of conveyance.'

However, the trial court's conclusions and reliance on the foregoing provisions of the condominium declaration are contrary to the perspicuous language of § 448.080(2) and the concomitant declaration provisions taken from the paradigm of § 448.080(2). Section 448.080(2) expressly sets forth the priorities between the two types of encumbrances involved in this case. It is palpable from the following language of § 448.080(2) that the encumbrances of the defendant deed of trust holders under...